For Immediate Release
December 6, 1996

NTT to Introduce Pure Holding Company Structure

Nippon Telegraph and Telephone Corporation (NTT) announced today that it has basically agreed with the reorganization plan for a pure holding company structure (100% capital from NTT) that was proposed by the Ministry of Posts and Telecommunications (MPT) (see Attachment). Previously, NTT had proceeded reconciliation with MPT on NTT's management structure in response to the Cabinet decision in the Japanese government.

NTT has agreed to the reorganization plan primarily because the introduction of the pure holding company structure will resolve the issue of shareholders' right protection, which has been the most difficult issue in connection with the separation and break-up of NTT, and will also enable NTT to enter international telecommunications business.

NTT will make efforts to conduct its reorganization in line with the plan from now on. In fact, the company will further develop its business by promoting NTT Group's business management under the holding company structure as well as by deploying various businesses in the fields of international telecommunications and multimedia.

To conduct the above reorganization procedure, NTT believes legal measures such as introduction of pure holding company into NTT, special treatment for introduction of consolidated tax payment and for exemption from asset transfer taxation are indispensable. NTT will solicit above mentioned legal measures to the Japanese government.


Policy on NTT's Reorganization

(MPT's official report tentatively translated by NTT)

Based on the Cabinet decision on the Revision of Deregulation Promotion Program of March 29, 1996, MPT has been studying the appropriate corporate structure of NTT, and has decided on the following policy.

In line with this policy, MPT will proceed with necessary coordination in the government, and submit a bill to the next ordinary Diet session.

NTT will be reorganized into a long-distance company and two regional companies, under a holding company.

The long-distance company will be a private company basically to provide inter-prefectural services, and will be allowed to advance into international telecommunications services.

The regional companies will be special companies basically to provide services within a prefecture, and will be responsible to secure universal telephone services within the area.
The business areas covered by the regional companies will be East Japan (Hokkaido, Tohoku, Kanto, Tokyo and Shin-etsu) and West Japan (Tokai, Hokuriku, Kansai, Chugoku, Shikoku, Kyushu, and Okinawa).

The holding company will be a special company, which will hold all the shares of the two regional companies, and will engage in fundamental research and development programs.
The holding company will also hold all the shares of the long-distance company.

Concerning research and development activities, all fundamental R&D activities shall be conducted by the new holding company. Business-oriented applied R&D activities shall be conducted by the new long-distance company and regional companies.

NTT shall be actively engaged in the following activities with a view of making inroads into international telecommunications services:
- To participate and invest in overseas telecommunications businesses
- To cope with global information distribution needs of multi-national corporations, etc.

Conditions to ensure fair and effective competition shall be established among the new long-distance company and regional companies.

To implement the NTT reorganization, MPT shall coordinate with other government organizations to amend related laws and regulations, such as the Anti-monopoly Law and Commercial Code as well as to establish special taxation treatment, including consolidated tax payment and exemption from asset transfer taxation.

Concerning the reorganization, MPT shall conduct necessary coordination while soliciting views from concerned parties about necessary items. MPT shall then submit relevant bills to the next ordinary Diet session.